Artificial Life Announces New Business Strategy

HONG KONG and BERLIN, July 18, 2011 /PRNewswire-Asia/ -- Artificial Life, Inc., (OTCPK: ALIF), a leading provider of award-winning mobile technology and applications (the "Company") announced today a re-structuring and re-orientation of its main business activities and new strategic goals.

The Company (ALIF) announced that it intends to transform itself into a global mobile technology investment venture. The Company's subsidiary Artificial Life Investments Ltd. launched in 2010 (based in the Cayman Islands) will become the key investment entity expanding on its initial investments. At the end of 2010 Artificial Life Investments Ltd. made its first minority investments in a German augmented reality start-up company and in a mobile health start-up company with a focus on the Middle East and Africa and invested approximately 12 mm USD in cash and assets in exchange for equity. The Company also has invested over 40 mm USD and  acquired  intellectual property (IP) and certain license rights over the last few years and has produced substantial new assets and IP of its own which it intends to license or divest and use the resulting proceeds for investment purposes.

As already announced in prior communications the future investment focus of the Company will be on South America (mainly Brazil), Russia, India, Asia (mainly Greater China), (South) Africa, and the Middle East, i.e. the countries commonly known as the BRICS nations. However, the general investment strategy will be flexible and opportunistic allowing the Company to also invest in promising targets in other territories (such as Europe or the US) when they are presented.

In these markets the goal will be to become a major player in the smartphone business by investing in promising firms with special products and expertise in the following technologies:

• near field communication (NFC)
• smartphone apps (games, lifestyle, healthcare and business apps)
• augmented reality
• social networking games and apps
• m-commerce

The Company plans to acquire equity stakes in exchange for its IP or do cash investments or a combination thereof whenever appropriate.

By focusing on investment and financing activities the Company intends to substantially transfer its own current operational activities and outsource its future R&D, new product development, sales, and distribution activities to the companies it will invest in rather than doing it by itself.

Current contracts and obligations however will be honored with existing clients and will be fulfilled and phased out through 2012. Future new contracts will be executed with partners, investment companies, and joint ventures as subcontractors when needed.

In addition the Company plans to launch joint ventures with larger companies around the globe to make the best future commercial use of its diverse range of IP.

The Company also announced that it already entertains concrete negotiations with several major companies towards this end. Negotiations are ongoing about licensing and sales of some of the Company's assets such as some of its game titles and development engines, some of its business apps, its Opus-M™ platform, its MoPA-TV® platform, and its augmented reality assets.

The Company further announced that as a first step for implementing the new strategic orientation it will close its Los Angeles and Tokyo offices. The Company intends, however to keep its offices in Hong Kong, Berlin, and South Africa and may open other offices in the BRICS nations at the appropriate time.

"Management values our current assets at a multiple of our current market cap. Therefore, we think the time is ripe to make better use of our assets to increase shareholder value. With our innovative investment strategy using our valuable IP to acquire equity in promising companies and strongly reducing operational costs we believe that we are in a unique position to become a stronger player in the smartphone business and a serious player in the mobile investment field . Our key financial goal is to improve shareholder value and to get our stock price back to acceptable levels with our new business approach," said Frank Namyslik, CFO of Artificial Life, Inc.

"We have been successful in the mobile and smartphone business since we ventured into the mobile space with continuous and substantial growth in revenues and profits year after year since 2006. We have become one of the leading smartphone developers and publishers in the world with over 60 million downloads and even reached the #1 ranking among iPhone apps fourteen times in many key countries around the world. However, our stock price and market cap have not followed this success story and our stock price has now reached such low levels that are in no way satisfying. Therefore, we made the strategic decision to change our business model and goals. We believe this is necessary and appropriate now and in the best interest of all our shareholders.

We have worked hard over the past years and have produced valuable IP and leading edge mobile products and technologies. However, due to the low stock price over the last years we have never had the chance to raise a substantial amount of cash to get the Company to the next level or to invest in other entities without a major potential dilution for our shareholders. Hence, our alternative approach now is to license and sell some of our IP which is in demand and use it as a "currency" for investments rather than our equity or cash.

We believe that our Company will grow faster and stronger with this new strategy than it would by continuing to grow organically as we have done in the past. We have shown that we know how the mobile markets work and how to be successful with mobile apps and technologies, so we believe we have the expertise and knowledge to find and evaluate solid and promising investments in this space.

Our goal is now to become an even stronger player in the smartphone field by scouting good firms preferably in an early stage, investing in them, helping them to grow their business through the introduction to our partner and client networks. We would then work with these partners and other investors to increase value and/or to sell our stake to strategic investors or partners or to exit through IPO's at the appropriate time. On top of that we are planning to launch some key joint ventures with partners in which we will inject some of our intellectual properties. It's a fascinating new perspective and we are excited about the new tasks and commercial opportunities," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

The Company announced that due to the new business strategy it expects the 2011 financial results to differ substantially from the 2010 results and from former years and that no guidance can be given about how the new business strategy will impact the current and future financial results. The Company has evaluated several potential investments in the first half of 2011 but has not done any new investments in the current year yet, however expects to do so in the second half of 2011. Investments in 2011 and 2012 are expected to be mostly minority investments and hence may not be consolidated into the Company's consolidated financial statements. The time and value of income generated from the sales of its assets and current or future investment stakes cannot be predicted at this time and neither can the value of future license arrangements or IP sales.  Future income is expected to be derived mostly from selling equity stakes in companies after investments and no longer from operational activities and product revenues.

About Artificial Life, Inc.

Artificial Life, Inc. has been a pioneer in artificial intelligence and mobile technology since its inception in Boston in 1994. We are a public US corporation (OTCPK: ALIF) with listing on the Frankfurt Stock Exchange (Frankfurt: AIF.F; Xetra: AIF.DE) and headquarters and production center in Hong Kong. Our EMEA headquarters is in Berlin, Germany. Currently our main business areas are: high quality (3D) interactive (massively multiplayer) mobile games, mobile participation television, mobile business applications, our powerful mobile commerce technology platform OPUS-M™ and our green IT solutions provided by Green Cortex, Inc. We have won many industry awards for our outstanding technology and products.

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Forward-Looking Statements:

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our future results of operations, financial condition and business prospects. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, our ability to obtain additional funding to operate and grow our business; the unproven potential of our mobile gaming business model; changing consumer preferences and uncertainty of market acceptance of our products; timely adoption and availability of 3G and broadband mobile technology; market acceptance for use of mobile handheld devices to play the interactive games; unpredictable mobile game development schedules; our reliance on a relatively small number of brands; our ability to license brands from others; our dependence upon resellers and telecommunication carriers and operators to distribute our products; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 10-KSB filed on March 16, 2010. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.

Non Solicitation Disclaimer:
This press release is for information purposes only.  No information on this press release is intended to constitute, and should not be constituted as an offer to sell, or a solicitation of an offer to buy, any securities of Artificial Life, Inc.  When making any investment decisions, investors should review securities reports, filed or submitted by the Company with the relevant regulatory authorities, and should exercise their own judgment in making their investment decisions.  This press release shall be considered as a forward-looking statement.

For more information on ARTIFICIAL LIFE, INC., please contact:

Artificial Life IR and PR Contact:
Adeline Law
Tel: (+852) 3102 2800
[email protected]

SOURCE Artificial Life, Inc.

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